REVENUES ARE DOWN Q/Q, UP Y/Y: Q1 saw $1.06 billion revenues, up from $731 million the same quarter last year and down from $1.131 billion during Q4 2011. Seasonality is a factor here. Revenues also declined between these two quarters a year ago.

PROFITS ARE DOWN: Q1 saw $205 million in net income, down from $233 million the same quarter last year and down from $302 million during Q4 2011.

OPERATING INCOME DOWN: Q1 was $381 million versus $548 million in Q4 2011.

Where did profits go? Cost of revenue went up to $277 million in the first quarter from $167 million during the same period last year. Marketing and sales went up to $159 million, up from $68 million a year ago. R&D went to $153 million, up from $57 million a year ago.

Facebook says it bought Instagram with $300 million in cash and 23 million shares

There was a $200 million break-up fee if the deal had gone south.

Facebook is up to 900 million monthly active users.

Facebook's plan for Instagram: "Following the closing of this acquisition, we plan to maintain Instagram’s products as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing."

Facebook calls patent lawsuits like Yahoo's a risk. "On March 12, 2012, Yahoo filed a lawsuit against us in the U.S. District Court for the Northern District of California that alleges that a number of our products infringe the claims of ten of Yahoo’s patents that Yahoo claims relate to “advertising,” “social networking,” “privacy,” “customization,” and “messaging.” Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement, and an injunction. We intend to vigorously defend this lawsuit, and on April 3, 2012, we filed our answer with respect to this complaint and asserted counterclaims that Yahoo’s products infringe ten of our patents. This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to Yahoo’s claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations."